Personal Insurance

Common Insurance Misconceptions

It’s easy to get incorrect ideas about your insurance. Luckily, you can always go to your trusted insurance adviser to help correct your insurance misconceptions. Let’s debunk a few common misunderstandings:

Misconception: My home is not located in a flood zone, so floods are not a risk and I don’t need flood insurance.

Even if your home is not located in a high-hazard flood zone, you are still at risk. Hurricanes, winter storms, and snow melt are common and often overlooked causes of flooding. New land development can increase flood risk, especially if the construction changes natural runoff paths. Nearly 25 percent of all flood claims come from moderate to low flood risk areas.

Though you may not be required to hold flood coverage based on your geographic location, this is still important coverage to add to your policy. Remember, standard homeowners and renters insurance policies do not cover flood damage, so you will need to discuss this coverage with your agent in order to add it to your policy.

Misconception: The value of my home has declined with recent market fluctuations, so I should be able to lower my insurance coverage to save money.

The value of your insurance policy should be based on the cost to rebuild your home rather than the market or tax value of your home. The purpose of the homeowners policy is to rebuild your home and replace its contents in the event of a total loss, so the policy value should be based on actual rebuilding and replacement costs rather than perceived market value.

How do you determine how much coverage you need? Your insurance agent has access to tools that will help estimate the rebuilding costs of your home. Your help in maintaining an accurate home inventory will aid in ensuring your policy is adequate for your needs.

Misconception: I added my boat to my homeowners policy, I don’t need any other coverage to protect this asset and my liability.

While it is easy and convenient to add a boat or personal watercraft to your homeowners policy, the coverage options are limited. A separate watercraft insurance policy provides more in-depth coverage, including the following options:

  • Uninsured/underinsured watercraft bodily injury
  • Fuel spill liability and wreckage removal
  • Personal effects
  • Unattached equipment coverage
  • Emergency assistance
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